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The Respondents, a WIC approved vendor, store owner, and manager violated the WIC Agreement and state and federal laws and regulations by overcharging and check typing on four separate occasions. In addition, the Respondents failed to post prices on all items and substituted unauthorized food products for authorized WIC products. The Respondents are disqualified from participation in the WIC Program for three years.
On September 24, 2008, pursuant to 7 CFR 246.12(g)(3)(i), the Petitioner, Department of Public Health-WIC Program (DPH), issued a Notice of Termination of WIC Vendor Agreement and Disqualification from the WIC Program for the period of three years to the Respondents, Kwike Market, Steven Khoury, owner and Manal Khoury, manager, (WIC Vendor No. 6104). (Exhibit 1). The Respondents filed a timely appeal and request for hearing on October 27, 2008. (Exhibit 2). A hearing was held on March 10, 2009 at the offices of the Division of Administrative Law Appeals (DALA), 98 North Washington Street, Boston, MA, pursuant to G.L. 30A, 801 CMR 1.02 et. seq., the Informal Rules, and interagency agreement.
At the hearing, twenty-two (22) exhibits were marked. The Petitioner presented
the testimony of: Mary Blocksidge, the DPH WIC Program Director; and, the undercover compliance buyer for the WIC Program, whose identity was protected by a screen during testimony. The Respondent, Steven Khoury, store owner, provided testimony on behalf of Kwike Market. Both parties stated their arguments for the record. One (1) tape was made of the proceedings.
Based upon the testimony and documents submitted during the hearing in the
above-entitled matter, I hereby render the following findings of fact:
1. The DPH is responsible for administering the Massachusetts WIC Program and enforcing the laws, rules and regulations pertaining to said program. (Testimony).
2. The WIC Program is a nutrition and education program, whose purpose is to provide food supplements and nutrition information to eligible low-income pregnant women, breastfeeding mothers, infants and children up to five (5) years of age. The WIC Program was created by the Federal Child Nutrition Act of 1996, and is found at 42 U.S.C. s. 1771 et. seq. Regulations governing the WIC Program are found at 7 CFR 246 et. seq. The program is administered on a federal level by the United States Department of Agriculture, and on the state level, by the DPH. (Id.).
3. Persons eligible for participation in the WIC program are issued WIC checks [vouchers/prescriptions] which can be used to purchase prescribed WIC products at stores authorized to redeem them. (Id.).
4. These checks can be redeemed only at authorized WIC vendors' stores.
A store seeking to become an authorized WIC vendor must apply to the DPH to participate. (Exhibit 6).
5. The WIC Vendor Application is a written document that specifically states that the store owner will be "bound by the WIC Program regulations and policies" including: accepting responsibility on behalf of the store and its owner(s), manager(s), and employees including new, part-time, paid or unpaid employees for violations of WIC procedures committed. (Id.).
6. Every WIC vendor, including the Respondent, is provided with written training materials regarding the proper way to process WIC checks. Additional training is available at other times upon request. (Testimony).
7. The WIC Program is required to conduct vendor monitoring in order to prevent waste and/or fraud that may result from the improper processing of WIC checks. To this end, the WIC program has employed the services of an undercover compliance buyer who visits random WIC vendors and makes purchases with designated WIC checks. (Testimony and 7 CFR 246.12[j]).
8. The Respondent, Kwike Market, located at 363 Washington Street, Haverhill, MA, includes: Steven Khoury, store owner, and Manal Khoury, store manager. (Testimony).
9. Kwike Market applied to be a WIC vendor on or about May 15, 2006.
10. The Massachusetts WIC Program Vendor Agreement for fiscal years 2008-2009 (Agreement) includes, at pages 8-10, the WIC Program Sanction Policy. Appendix A of the Agreement (pages 21-27) contains a listing of violations and the number of sanction points applicable to different classes of violations. Sanction points are charged against a vendor if violations of the Agreement are found. (Exhibit 3).
11. Either the vendor or the state may terminate the Agreement for cause upon
fifteen (15) days written notice. (Id.).
12. Steven Khoury received training concerning WIC procedures, violations and the sanction policy on or about October 17, 2006. (Exhibit 5).
13. Manal Khoury received training concerning WIC procedures, violations and the sanction policy on or about October 16, 2007. (Exhibit 4).
14. The compliance buyer made vendor monitoring visits to Kwike Market on: May 19, 2008, May 26, 2008, June 19, 2008 and June 25, 2008. (Exhibits 6, 9, 12 and 15).
15. Following each of the visits on the dates specified above, the compliance buyer prepared a written report that included information about her observations of the store personnel and inventory, what, if any checks she had spent at the vendor's store, what, if any, items she purchased with those checks, whether or not the amount of her actual purchase was written on the WIC check in her presence and prior to the clerk asking her to sign the check, whether items she purchased had prices affixed to them, a description of the check-out person at the vendor's store, and other comments and information regarding what she did and observed while at the vendor's store on each date. (Id.).
16. At the time of the 12:09 P.M. May 19, 2008 monitoring visit to Kwike Market , the compliance buyer used two WIC checks (one Type 156A-1 and one Type 156A-2). Using the check Type 156A-1, with a serial number ending with "520", the compliance buyer purchased: one gallon of Garelik whole milk, two 8.7-ounce (oz.) boxes of General Mills Kix Cereal at $3.19 each, and two 46 oz. ounce containers of grape Juicy Juice. The prices of the milk and the juice were not posted in the store or on the items themselves. These prices were later established as $4.29 for the gallon of milk, per the July 18, 2007 price list on file with DPH, and $2.29 each for the juice, per the May 15, 2006 price list on file with DPH.
Using the Type 156A-2 check, with a serial number ending in "521", the compliance buyer purchased another gallon of Garelik whole milk, an 8 oz. package of Heluva Good Colby Cheese, one 16 oz. bag of Goya Pinto beans at $1.19, and two additional 46 oz. containers of grape Juicy Juice. The prices of the milk, cheese and juice items were not posted in the store or on the items themselves. The milk was priced at $4.29, per the July 18, 2007 price invoice on file with DPH, the cheese cost $2.49 and the juice containers cost $2.29 each, per the May 15, 2006 price list on file with DPH.
The cashier and the compliance buyer discussed the fact that the buyer did not get all of the items listed on the checks. The cashier, a white, brunette female, approximately 5'3" tall, and, who appeared to be in her mid to late twenties, did not ring up any groceries. She had the compliance buyer sign the checks without purchase totals entered. (Id. and Exhibits 19 and 20).
17. These two purchases made with those WIC checks had actual costs of $8.87and $10.26, respectively. The cashier wrote a total of $26.02 on the first check (Type 156A-1), for an overcharge of $17.15, and a total of $13.55 on the second check (Type 156 A-2), for an overcharge of $3.29. (Exhibits 6-8).
18. During the May 26, 2008 11:29 A.M. monitoring visit to the same market, the compliance buyer spent another two WIC checks (one Type 156A-1 and one Type 156A-2). Using check Type 156A-1, with a serial number ending in "545", the compliance buyer purchased: one gallon of Garelik whole milk at $4.49 per the July 2007 price list (price not posted); one 19 oz. ounce box of Post Frosted Shredded Wheat cereal at $4.79 as marked on the item; two 46 oz. containers of apple Juicy Juice at $2.29 each, per the May 15, 2006 price list (price not posted), and one 17 oz. box of Post Trail Mix Crunch cereal at $4.79, as posted on the item. With the Type 156A-2 check, with a serial number ending in "546", the Compliance Buyer purchased: a second gallon of Garelik whole milk at $4.49 (price not posted); one 10.6 oz. Sandwich Mate cheese at $2.49 as marked on the item; one pound of Goya pinto beans at the affixed price of $1.19; and, one more 46 oz. container of apple flavored Juicy Juice at $2.29, (price not posted). (Exhibits 9, 19 and 20).
20. The two purchases with the WIC checks on May 26, 2008 had actual costs of $8.87 and $7.77 respectively. The same cashier assisted the compliance buyer. She denied the buyer's request to purchase a second 19 oz. box of cereal, stating that the buyer was only allowed up to 36 oz. of cereal. On that date, the store had only 19 oz. and 20 oz. boxes of cereal on the shelves. She did not ring up the purchase of groceries. She had the compliance buyer sign the checks without the purchase totals written in. The cashier wrote a total of $26.02 on the first check and $13.55 on the second check. (Exhibits 9 and 10).
21. The total charged by the store for the items purchased on May 26, 2008 with check Type 156A-1, the $26.02, resulted in an overcharge of $17.15. The amount charged for the items on the Type 156A-2 check, $13.55, resulted in an overcharge of $5.78. (Exhibit 11).
22. The compliance buyer returned to Kwike Market again at 1:38 PM on June 19, 2008. Using a Type 156A-1 check with a serial number ending in "281", she purchased: one gallon of Garelik whole milk at $4.49, per the July 2007 price list (price not posted on or near item); one 19 oz. box of Post Honey Bunch of Oats cereal at $4.79 and, two 46 oz. containers of apple Juicy Juice at $2.99 each as marked on the items. Using the Type 156A-2 check with a serial number ending "282", the compliance buyer purchased: another gallon of Garelik whole milk at $4.49 per the July 2007 price list (price not posted); one 8 oz. package of Heluva Good cheddar cheese at $2.49 per the May 2006 price list (price not posted on or near item); one 16 oz. bag of Goya red kidney beans at $1.19 as marked; and, two more 46 oz. containers of apple Juicy Juice at $2.99 each as marked on the items.
The two purchases totaled $15.06 and $10.96 respectively. On that date, the
compliance buyer was assisted by the same cashier who had assisted her on the prior occasions. She again failed to ring up the total of the grocery items prior to the compliance buyer signing the checks. There were no cereal boxes in the store that day that weighed less than 19 oz. The cashier would not allow the compliance buyer to purchase more than one box of cereal. Later, she entered amounts on the two checks as $26.02 and $13.55, respectively. (Exhibits 12 and 13).
23. The total amount charged by Kwike Market for the items purchased on June 19, 2008 with check Type 156A-1, the $26.02, resulted in an overcharge of $10.96. The total charged by the store for the items purchased that day with check Type 156A-2, the $13.55, resulted in an overcharge of $2.59. (Exhibits 13 and 14).
24. The final compliance monitoring visit took place on June 25, 2008 at 2:40 P.M. The compliance buyer used a check Type 156A-1, with a serial number ending in "291", to purchase the following items: one gallon of Garelik whole milk at $4.49, per the July 2007 price list (no price on or near item); one 19 oz. box of post Honey Bunch of Oats cereal at $4.79 as posted on the box; and, two 46 oz. containers of apple Juicy Juice at $2.99 per the price on the items.
Using a Type 156A-2 check, the compliance buyer purchased: another gallon of Garelik whole milk at $4.49 per the July 2007 price list (price not on or near item); 8 oz. of Heluva Good cheddar cheese at $4.49, per the May 2006 price list (price not posted on or near the item); one 16 oz. bag of Goya Red Kidney beans at $1.19 as posted on the item; and, two more 46 oz. containers of apple Juicy Juice at $2.99 each, as posted on the items.
The same cashier assisted the compliance buyer on June 25, 2008. The store did not carry any cereal smaller than a 19 oz. box on that date. Again, the cashier did not ring up any of the items. She had the compliance buyer sign the checks without writing the amounts on the checks. The cashier entered amounts on the checks of $26.02 and $13.55, although the actual purchase amounts only totaled $15.06 and $10.96, respectively. (Exhibits 15 and 16).
25. The Kwike Market submitted the amount of $26.02 on the June 25, 2008 Type 156A-1 check, for an overcharge of $ 10.96. The amount written on the Type 156A-2 check, $ 13.55, resulted in an overcharge of $2.59. (Exhibits 16 and 17).
26. Overcharging is a Class II violation, as set forth in Section 6.b of the 2008-2009 WIC Vendor Agreement. The term overcharge refers to the writing on the check of an amount which is higher than the actual price of the products purchased by the authorized compliance buyer. The Vendor Agreement further provides that vendors who commit Class II violations shall be disqualified from the WIC Program for three years. (Exhibit 3, Sections 6.b and I [A]).
27. Check typing is also a Class II violation as set forth in Section 6.g of the 2008-2009 WIC Vendor Agreement. Check typing is the charging of an authorized WIC buyer of a set price according to the type of check, i.e. 156-A1 or 156-A2, instead of pricing each check according to the items purchased. (Id., Section 6.g).
28. On September 4, 2008 DPH terminated the Respondent's Vendor Agreement and disqualified Kwike Market and its owner and manager from participation in the WIC Program for a period of three (3) years. (Exhibit 1).
29. The DPH also charged the Respondents with Class III violations. A Class III violation is the provision or substitution of unauthorized food products for authorized WIC products specified on the WIC check as set forth in section 4.f of the WIC Agreement:
Violation on May 19, 2008 when two 8.7 boxes of Kix cereal were
purchased by the compliance buyer. The WIC program only allows 12 oz. or larger boxes of cereal to be purchased.
Violation on May 26, 2008 when one box of Post Shredded Wheat, one
Box of Post Trail Mix Crunch and one 10 2/3 oz. package of Sandwich Mate Cheese were purchased. These items are not WIC approved.
30. The Respondent were also charged with Class IV violations and assessed Sanction Points. The Class IV violations are violations of Massachusetts WIC Program rules, regulations, policies or procedures, violations of the Vendor Agreement, administrative and technical violations, as well as irregularities in pricing and check acceptance and redemption. Vendors who commit Class IV violations are assigned Sanction Points and may be disqualified depending upon: the cumulative value of Sanction Points issued; the nature and severity of violations; or the Vendor's history of compliance with WIC policies and procedures. The accumulation of twenty or more Sanction Points constitutes sufficient grounds to disqualify a Vendor for one year. The Respondent was charged with the following Class IV violations and assessed the corresponding Sanction Points:
Class IV violation- Failure to comply with Federal, State and Local laws and
regulations pertaining to the disclosure of prices for any items offered for sale
in violation of G. L.c. 93A §2 as defined in 940 CMR 3.13(1)(a) which states:
"It is an unfair or deceptive trade practice for any person subject to 940 CMR 3.13
to fail to affix to any goods offered for sale to consumers the price at which
the goods are to be sold."
This violation occurred with respect to the sale of milk, Juicy Juice and
Cheese on May 19, 2008. 10 Points
This violation occurred with respect to the sale milk and juice on May 26, 2008.
This violation occurred with respect to the sale of milk and cheese on June 19, 2008. 10 Points
This violation occurred with respect to the sale of milk and cheese on June 25, . 2008. 10 Points
Class IV violation- Failing to fill in the amount of purchase in the presence
of the authorized WIC shopper before the authorized WIC shopper has countersigned the WIC check.
This violation occurred with respect to all of the checks used in the four
compliance visits on May 19, May 26, June 19 and June 25, 2008.
TOTAL SANCTION SCORE: 80 POINTS
(Exhibits 1 and 3).
31. According to the WIC Vendor Agreement, the failure to stock and maintain the WIC mandatory minimum in required quantities after one warning shall be grounds for disqualification. On two occasions, the Vendor did not have the correct size cereal boxes on the shelves. (Id.).
The DPH has met its burden of proving by a preponderance of the evidence that
the statutory and regulatory Class II - IV violations set forth in the September 24, 2008
Notice of Termination of the WIC Vendor Agreement and Disqualification From the
WIC Program took place on May 19, May 26, June 19 and June 25, 2008.
The Petitioner has put forth a strong and credible case both in documentary and
testimonial evidence which the Respondents have failed to refute. In rendering this
conclusion, I have credited the testimony of the compliance buyer who systematically
recorded observations of the store inventory or lack thereof, any items purchased, and her experiences of issuing the WIC checks to the cashier, all within a very short period of time after each monitoring visit. The individual appeared to be a methodical professional who demonstrated no bias or other hidden agenda against the Respondents or any other motive to be less than truthful. The Respondents did not contest the facts, but rather asked for a reprieve, promising to comply in the future. Unfortunately, this promise is too little too late. The Respondents had received training in WIC procedures and were obligated to see that any store employee or volunteer carried out those procedures to the letter of the law. The request for leniency cannot halt the disqualification process. Neither DPH nor DALA have any discretion but to uphold the controlling regulations in this case.
The Respondents raised neither any legitimate legal issues concerning the alleged lack of due process in the Petitioner's management of this case, nor, any regulatory or legal violations by the Petitioner that would negate the Findings of Fact set forth herein or those actions taken by the Petitioner in pursuit of the sanctions to be imposed upon the Respondents.
Accordingly, the Vendor Agreement for Kwike Market is terminated, and, there is a disqualification from participating in the WIC Program for three years.
Division of Administrative Law Appeals,